TORONTO, Feb 19 (Reuters) - Canada’s auction of prized wireless spectrum could generate much more money for the federal government than anticipated, industry analysts said on Wednesday.
The results of the auction of licenses for 700 megahertz spectrum, which is valued for its ability to carry signals over long distances and to allow signals to penetrate buildings, will be revealed by the government at 1700 EST (2200 GMT) on Wednesday.
The lack of interest in the auction by any major foreign telecom players, and late withdrawals by small domestic companies had spurred speculation that bidding would be subdued.
Some analysts are now re-thinking that scenario, however. They say the big three domestic players, Rogers Communications Inc, Telus Corp and BCE Inc’s Bell Canada, along with large regional players such as Quebecor Inc’s Videotron, may have bid up prices in a narrowed playing field to try to secure the airwaves that will allow them to build more powerful mobile networks.
Despite “an absence of foreign bidders and a contraction in domestic participation, the government may have stimulated just enough competition to boost auction proceeds above market expectations,” National Bank analyst Adam Shine said in a note to clients on Wednesday.
Some analysts projected in January that the auction would bring in between C$1.5 billion ($1.37 billion) and C$2.5 billion for the government, much below original expectations. This followed the late withdrawal of a key player, upstart telecom Wind Mobile, after its main backer, Vimpelcom Ltd, pulled out.
Shine said he now believes that the auction is likely to have raised twice his initial forecast of C$2.5 billion on the back of Quebecor having bid on spectrum outside of its home province of Quebec.
That view was echoed by Canaccord Genuity analyst Dvai Ghose and other industry sources, who spoke on the condition of anonymity because of the sensitive nature of the process.
Ghose said he now anticipates proceeds from the auction of C$3.4 billion to C$5.7 billion, up from his previous forecast of C$1.5 billion to C$2.5 billion.
Rogers and Quebecor did not respond to requests for comment on their bidding strategies. But as bidders, the companies are barred from such discussions by the auction rules.
Shares of Canadian telecom companies were little changed in early trading on Wednesday, ahead of the auction results.